The US senate passed a bill on Tuesday requiring American companies to notify federal agencies if they invest in critical Chinese technologies like chips, artificial intelligence (AI) and quantum computing.
The bill is a watered down version of the initial Outbound Investment Transparency Act, which mandated a review of such investments and even empowered the US Treasury Department to stop specific deals. The amended bill also targets fewer Chinese industries.
Passed by an overwhelming majority in the senate, the bill will need the backing of the US House of Representatives and President Joe Biden, before it can become a law.
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“We need this type of outbound investment notification to understand just how much … critical technology we are transferring to our adversaries via these capital flows. With this information in hand, we can begin to take control of our economic future,” said Republican senator John Cornyn, who co-authored the bill Democrat Bob Casey.
The desire for a hard line on China is one of the few sentiments that the two sides of the deeply divided US Congress truly agree on.
Lawmakers have introduced dozens of bills seeking to address competition with the Chinese government and industries. Eyes are also on President Biden to sign an executive order restricting investment in Chinese high-tech industries.
Meanwhile, the Biden government worked closely with senators Cornyn and Casey to taper down initial versions of the act introduced two years ago, Axios reported.
Increasing trade tensions and the deepening trade war with China have amped up supply chain risks for US firms.
Beijing has retaliated against US actions by implementing export curbs on key chipmaking metals gallium and germanium and even partially restricting sales of chip giant Micron in the country.
The moves have also worsened already sour relations between the world’s two biggest economies, leading to increased efforts by Washington to stabilise ties.
US treasury secretary Janet Yellen, who visited China this month as part of those efforts, attempted to assuage Beijing’s concerns about US investment controls during her meetings in the country.
Yellen had, at the time, informed worried officials in Beijing that restrictions on US-based investments in China, stemming from Biden’s expected executive order, would be “transparent” and “narrow” in scope.
She had also informed Chinese officials that they could “raise concerns” about such US actions. Washington might “respond to unintended consequences” of its restrictions, she had said.
- Reuters, with additional inputs from Vishakha Saxena
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